INTRODUCING AIT WORLDWIDE LOGISTICS · AIT WORLDWIDE LOGISTICS Presented by Andrew Poll, Director of Sales USA, Central Region. Freight Forwarding 101 Topics What is the role of a

INTRODUCING

AIT WORLDWIDE LOGISTICSPresented by Andrew Poll, Director of Sales USA, Central Region

Freight Forwarding 101 Topics

▪What is the role of a Freight Forwarder?

▪Overview of Modes Domestic and

International

▪ International Documentation Overview

▪Customs Brokerage Overview

▪ Incoterms Overview and Considerations

▪Q&A

What do Freight Forwarders Do?

The International Federation of Freight Forwarders

Association, or the FIATA, describes a Freight

Forwarder as the "Architect of Transport,”

describing the commercial position of the forwarder

in relation to its client.

Freight Forwarding Services Overview

International Air and Ocean

▪ Import and Export

▪ Expedited / Consolidated

▪ Ocean FCL / LCL

▪ Exclusive Charters

▪ Breakbulk / Project Cargo

Customs Clearance

▪ Compliance with FDA, USDA,

▪ DOT, TSA, and C-TPAT

▪ Licensed Brokers In-House

▪ Bonded Warehouse Locations

▪ Remote Location Filing (RLF)

▪ Importer Security Filing (ISF)

Transborder Service

▪ Canada: Pre-Arrival Release Systems

(PARS)

▪ Mexico: Maquiladora Expertise

Domestic Air Freight

▪ Next Flight Out / Same Day

▪ Next Day / 2-Day

▪ Weekend / Holiday

▪ Air Charters

Ground Transportation

▪ Expedited

▪ Three-Five Days Deferred

▪ FTL and LTL

▪ Hot Shot

Value Added Services

▪ Inside Pick Up and Delivery

▪ Technology-Reporting-PO Management

▪ Special Packing

▪ Skid and Band

▪ Merge In-Transit

▪ Warehouse

▪ White Glove

Domestic Services

• Same day/next flight out• Next day• 2nd day• 3 to 5 day deferred

• Truckload Brokerage/Intermodal

• Charter services

• Residential Delivery/Special services

• LTL Management

• 3PL/Warehousing

• Local Cartage

• Deconsolidation and Distribution

• Expansive US cartage footprint with our 43 stations and experienced provider network covering pickups and final mile delivery including special services

• Extensive service capacity through utilization of our growing truck network with a flexible hub and spoke strategy

• Service speed to market with deconsolidation of import product through our strategic gateways and truck network hubs designed to reduce cycle times.

• Established capacity with our strategic Airline partners for expedited air services.

• Quality Management System that defines, measures, and continuously improves the quality of service we provide

• QSI- Quality Satisfaction Initiative which drives continuous improvement and corrective action.

• Creating operating efficiencies through work flow processes and IT enhancements

• The implementation of our final mile mobile app solutions creating instant customer facing of POD’s

Leveraging A NetworkProduct Driving Quality Service

Performance

Local Pickup and Delivery

▪ Wide Variety of Services Offered

▪ Asset recovery

▪ White glove pickup/delivery

▪ Residential services

▪ Local cartage

▪ Service in All Major Metro Destination Markets in the USA

▪ 44 stations covering all 50 states

▪ Strong agent relationships in satellite markets to provide coverage beyond metro

areas

▪ Centrally-managed Agent Service Center ensures status updates and information

about your freight is readily available

▪ Robust process for vetting partners/agents to ensure security compliance with

corporate policies

▪ Quality measurements to ensure timeliness and accuracy of KPI’s

Customer Experience Cycle

Special Services – End-to-End

Final Mile

▪ Threshold

▪ Room of choice

▪ White Glove – unpack, dunnage removal

▪ White Glove Ultimate – unpack, assembly or

set-up and dunnage removal

▪ Customized assembly program solutions

Customer Service

▪ Dedicated customer service action team

▪ Bilingual online chat service

▪ Customizable SOPs, tracking and tracing

along with dedicated Control Towers

▪ Internal facing with customer

▪ External facing with consignee

▪ SharePoint blog, document management

Onboarding

▪ Operations, IT, Customer Service, Loss

Prevention

▪ Defined process, ongoing weekly internal and

external co-management

Account Management

▪ Defined metrics and goals

▪ Performance measurement

▪ QBR process – balanced scorecard

AIT Worldwide Logistics Slide 9

Domestic Air Freight

▪ Same Day/Next Flight Out

▪ Next Day

▪ Second Day

▪ Time Definite Delivery

▪ Charter Services (Domestic and

International Services)

International Air Freight

▪ Elite/NFO

▪ 24-48 hours airport-to-

airport service. Charter

▪ Heavyweight Air Express

▪ Door-to-door, time

definite

▪ Premier

▪ 48-72 hours airport-to-

airport service

▪ Scheduled departure and

arrival times

▪ Economy

▪ 5-7 days

▪ Scheduled departure and

arrival times

INTERNATIONAL AIR FREIGHT

Air Freight Product

Speed to Market service capacity

with deconsolidation of import

product through our strategic

gateways and flexible truck network

hubs, designed to reduce cycle

times.

Consolidation Services

Regional Opportunities to p/u and

move consolidated shipments from

Gateway to Gateway Markets,

gaining price and service

efficiencies.

Expansive U.S. Cartage Footprint

across the nation for pickups, final

mile delivery and special services.

Established Capacity with our

strategic airline partners to support

expedited air services as a top 5

national account with all major U.S.

airlines.

Network Leverage

Quality Management System that

defines, measures and continuously

improves the quality of service

provided.

Quality Satisfaction Initiative (QSI)

drives continuous improvement and

corrective action.

Creating Operations Efficiencies

through workflow processes and

technology enhancements.

Performance Quality


Quality Management System that

defines, measures and continuously

improves the quality of service

provided.

Quality Satisfaction Initiative (QSI)

drives continuous improvement and

corrective action.

Creating Operations Efficiencies

through workflow processes and

technology enhancements.

INTERNATIONAL OCEAN FREIGHT

Ocean Product Network Leverage

Unified Global Operating System

enhances efficiency and visibility of

freight in transit.

Flexible, Nimble Network capacity

and cost influence with end-to-end

reliability with the ability to optimize

capacity in all modes of

transportation.

Providing Solutions product

leaders with diverse experience that

provide customers with options

based from market intelligence.

Strategic Partnerships offer a

carrier network focused on long-term

growth with established multi-faceted

relationships throughout the

transportation industry.

Performance Quality

Seamless Transportation

▪ Import and Export

▪ Country-to-Country

▪ FCL / LCL

▪ Ocean Express Service

▪ Project Cargo

Ocean Freight

▪ Foreign Banking

▪ Sight Drafts

▪ Letter of Credits

▪ Legalization

▪ Certificate of Origins

▪ AES Direct Filing

▪ Breakbulk

▪ Out of Gauge Freight

Value Added Services

▪ End-to-End Visibility

▪ P.O. Management

▪ Landed Costing


International Documentation

What you need to know


TOPICS OF DISCUSSION

• Minimum document requirements

• Export Power of Attorney (POA) vs. Shipper’s Letter of Instruction (SLI)

• Automated Export System (AES)

• Shipper Documents: Commercial Invoice & Packing List

• Forwarder Documents: HAWB, HBL, MAWB, & MBL

• Additional Documentation

• Wood Packing Requirements


Minimum Documentation

Document

• SLI (Shipper’s Letter of

Instruction)

• Commercial Invoice

• Packing List

• Bill of Lading

➢ HAWB / HBL

➢ MAWB / MBL

• Customs Manifest

Prepared By

Shipper

Shipper

Shipper

Forwarder

Forwarder


Export Power of Attorney (POA)

• The Export POA authorizes the forwarder to

1. File AES on behalf of the USPPI

2. Issue additional export documentation on behalf of the shipper

➢ Certificate of Origin (C/O)

➢ Proforma Invoice

• Never expires unless revoked in writing.


Shipper’s Letter of Instruction

(SLI)

• A document that includes the shipping instructions for a particular shipment.

• Required for shipments with a value of $2500 or greater for a single Schedule B/ HTS number,

• Acts as a single shipment authorization

• Must be signed

• Recommended for all exports


Automated Export System

(AES)

• A joint venture between U.S. Customs & Border Protection (CBP), the Census Bureau, the Bureau of Industry & Security (BIS) the Directorate of Defense Trade Controls (DDTC), other Federal agencies, and the export trade community

• Required for any commodity code (Schedule B/HTS #) GREATER than $2,500

• Central point through which export data is submitted for review by U.S. CBP.

• Export information is collected electronically and reviewed immediately

• AES is a nationwide system operational at all ports and for all methods of transportation (Air, Ocean, Ground)


Commercial Invoice

1. Full exporter information

2. Full importer / consignee

Information

3. Date of export

4. Invoice number

5. P.O. number / Invoice number

6. Term of Payment (NET 30 / Wire

Transfer etc.)

7. Term of Sales (Incoterms® 2010)

8. Description of goods (units,

Schedule B/HTS code, country of

origin, unit price, & total

9. Signed BLUE ink


Commercial Invoice

Destination Control Statement

(DCS)

“These commodities, technology, or software

were exported from the United States in

accordance with the Export Administration

Regulations. Diversion contrary to U.S. law is

prohibited.”

• Required if items are subject to the Export

Administration Regulations (EAR)

• Excludes items classified as EAR99

• Required on invoice, bill of lading, air waybill, etc.


Packing List

• Details the shipment’s contents

• Required by local customs authorities if the content information is not detailed on the commercial invoice.

• Should be easily matched to the cargo

• No pricing required


Bill of Lading (Airway Bill)

An Airway Bill (AWB) is the document that covers all transport by air. It is issued by the carrier as a non-negotiable document serving as a receipt to the consignee for the goods. The AWB contains all the conditions of transport. House Airway Bill (HAWB) HAWB issued by a TSA freight handler who is acting as a carrier. Master Airway Bill (MAWB) MAWB is issued on airline's stationery to the TSA freight handler for all of the goods covered by one or more House AWBs. Direct Airway Bill (DAWB) A DAWB is a service where freight is transported on the airline DAWB without a HAWB. Direct shipments are generally used when freight and service needs are immediate. Freight is not consolidated with other cargo.


Bill of Lading (Airway Bill)

House Air Waybill (HAWB)Issued by forwarder to identify

shipper and consignee

Master Air Waybill (MAWB)Produced by forwarder to the

airline to tender a shipment or

consolidation to an airline


Bill of Lading (AIR Export Airway Bill)

HAWB STL

JB MFG

MAWB ORD TO AMS

Chicago to Amsterdam

HAWB MSP

Z Fashion

HAWB IND

XWZ Steel

HAWB MCI

AC Telecom

HAWB CVG

B Aerospace


Bill of Lading (Ocean)

House Bill of Lading (HBL)

• Issued by NVOCC to identify shipper &

consignee

• Issued in 2 ways

➢ Original

o Holder of original HBL is the

“owner” of the goods

o Must present the original in

order to receive the shipment

➢ Express Release

o No originals are required to

prove ownership of goods


Bill of Lading (Ocean)

Master Bill of Lading (MBL)

• Produced by steamship line

based on instructions from

NVOCC

• Issued in 2 ways

➢ Original

➢ Express Release


Express Release v. Original BOL

An original Negotiable HB/L is issued:

• An original HB/L is issued upon shipper request. The shipper will ask for an original to be issued usually

when he expects to be paid by the buyer for the value of the goods while the freight is in transit. (This

agreement is usually made because the transit time for ocean is so long that it allows both parties to meet

halfway: the shipper releases the freight before being paid and the buyer doesn’t have to pay out for the

goods 30 days or more in advance).

• The original HB/L is a negotiable document and always issued in 3 copies only.

• The original HB/L is issued at the port of origin by the forwarder and released to the shipper only after the

freight has departed.

• Once the shipper receives payment from the consignee, he will send the original to the buyer.

• The buyer (consignee) in turn must surrender the original HB/L to us (the destination forwarder). The only

possibility for a buyer to have an original HB/L is when he has paid for the goods and received the original

from the shipper. This is the guarantee for the shipper to get his money.

HB/L issued on “Express release”:

• It releases us the forwarder from any liability for the value of the goods.

• The goods can be released to the consignee without any further documents; a photocopy of the HB/L is

enough.

• The “express release” is a fairly new procedure (5‐6 years) that was put in place to make the procedure

less cumbersome when the buyer had already paid for the goods in advance and no further money

exchange between shipper and buyer is necessary.


Additional International Documentation

• Certificates of Origin

• Export Licenses & U.S. Government Lists

• Carnet

• Legalization

• Chamber of Commerce Notarization

➢AIT can help with all of the above document requirements too.


Export Licenses

I. U.S. Department of Commerce, Bureau of Industry & Security (BIS)

• Regulates the export of goods & related technology identified on the Commodity Control List (CCL)

• Regulates the export of commercial items with a “dual use” function

➢ Commercial

➢ Military

• Verification lists that fall under Dept. of Commerce control

➢Denied Parties List (DPL): Individuals & entities denied export privileges

➢Unverified List: End users that BIS has been unable to verify prior transactions

➢Entity List: Parties whose presence in the transaction can trigger a license requirement.


Export Licenses

II. U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC)

• Enforces economic & trade sanctions based on US foreign policy & national security

• License Types:

➢OFAC Specific Export License (T10)

➢OFAC General Export License (T11)

➢Kimberly Process Certificate (T12)

• Verification Lists that fall under U.S. Treasury Dept. control

➢Special Designated Nationals List: Parties who may be prohibited from export under OFAC.

➢Foreign Sanctions Evaders List: Foreign individuals & entities determined to have violated, attempted to violate U.S. Sanctions on Syria & Iran

➢Sectoral Sanctions Identification (SSI) List: Directed at Russia


Export Licenses

III.U.S. Department of State, Directorate of Defense Trade Controls (DDTC)

• Regulates the export of defense items & services covered by the U.S. Munitions List (USML).

• License Types:

➢ DSP-5: Permanent Export Defense Articles & Services (S05)

➢ DSP-61: Temporary Import of Unclassified Articles (S61)

➢ DSP-73: Temporary Export of Unclassified Articles (S73)

➢ DSP-85: Temporary/Permanent Import/Export of Classified Articles (S85) - Pilot is not registered to handle

➢ DSP-94: Foreign Military Sales (S94)


Export Licenses

III.U.S. Department of State, Directorate of Defense Trade Controls (DDTC) – Cont.

• Verification list that fall under Dept. of State control

➢AECA Debarred List: Entities & individuals prohibited in the export of defense articles, services, and technical data

• Export Control Statement (ECS): Required on all export documents (invoice & AWB)


Carnets

• Defined as a “merchandise passport”

• Benefits

➢ Unlimited exits / entries into the U.S. and foreign countries (valid for 1

year)

➢ Accepted in 75+ countries.

➢ Eliminate value-added taxes (VAT), duties, and the posting of temporary

import

➢ Simplifies customs procedures

➢ Facilitates re-entry into the U.S. by eliminating the need to register the

goods with U.S. Customs & Border Protection (U.S. CBP)

• Tectro/AIT carnets are required for shipments between Taiwan

& U.S.


Carnets


• International standard for wood packing material (WPM)

• Goal is to prevent the spread of plant & pest diseases

• International Plant Protection Convention (IPPC) & participating countries

maintain the requirements

• Heat Treated (HT)

• Methyl Bromide (MB) – Phasing out

Wood Packing Requirements (ISPM-15)


RECAP

• Check consistency between export paperwork and bills of lading

• Is AES required and who is responsible for filing

• Is the shipment a dangerous good or could it be perceived as a

dangerous good?

• Is a license, license exception, or license exemption needed?

• What additional documents are needed based on the country-specific

requirements

➢ Certificate of Origin (C/O)

➢ Chamber of Commerce (Chamberized)

➢ Legalization

➢ Wood-Packing Requirements

➢ Company Stamp / Sign in Blue Ink


When goods are imported into the Customs territory of the US

they are subject to certain formalities and procedures. The

goods are required to be “entered” or declared to the Customs

service, and must be in compliance with all of the rules and

regulations enforced by Customs and Border Protection (CBP).

The “entry” must contain all of the required documentation or

information, and can be sent to customs or transmitted to them

electronically.

What is Customs Brokerage?


Reasonable Care

• Defined as that degree of care that a person of

ordinary prudence would exercise in the same

or similar circumstances.

• Legal responsibility of the importer and his agent

(customs broker) to use in entering

merchandise.

• Mandated by the Customs Modernization Act on

December 8, 1993.


Who is responsible?

As part of the entry process goods must be “classified” to see

where they fall in the harmonized tariff schedule (HTS) and a

value must be determined. Per the Customs Modernization Act,

it is the responsibility of the importer of record to use

“reasonable care” to enter, classify, value and provide all

information applicable, so that CBP can: assess the correct

duty, ensure that regulations for the goods were adhered to and

get the proper statistics.


Reasonable Care- Importer Standards

• Consult with qualified specialists such as Customs brokers, consultants

and attorneys specializing in Customs law.

• Seek guidance from Customs through the formal binding ruling program

and then follow any binding rulings received.

• If using a broker, must provide the broker with full and complete

information sufficient enough for the broker to make proper entry or for

the broker to provide advice as how to make entry.

• Obtain analysis from accredited labs to determine the technical qualities

of imported merchandise. (Can be in-house)

• Using in-house employees who have experience and knowledge of

Customs regulations and procedures.

• Ensure that the products are legally marked with the country of origin to

indicate to the ultimate purchaser the origin of imported goods.

• Notify CBP when receiving different treatment for the same products in

different ports.

• Examine entries prepared by the broker to for accuracy in classification

and valuation.


Reasonable Care- Broker Standards

• Give competent advice

• Must exercise due diligence to ascertain the correctness of

information which he/she imparts to a client

• Shall not knowingly impart false information to a client

relative to Customs business.

• Shall not withhold information from a client who is entitled

to that information

• Establish internal procedures to limit advise being given, to

only those qualified licensed individuals

• Obtain and receive directly from importer, complete and

accurate information sufficient to make entry, or provide

proper advice.


Reasonable Care- Penalties

Penalty for importers failing to meet Reasonable Care Standards:

*Domestic value or twice the duty, whichever is less

* If duty free the penalty is calculated at 20% of the value

Penalty for brokers not meeting Responsible Care Standards:

*$30,000.00 per violation as provided for in 19 USC 1641


Receive Valid POA

Ma

nif

est

q

ue

ry a

nd

IS

F

RELEASE

Query the AWB/BL and confirm AMS info. File ISF 24 hours prior to loading

Do we have the EIN#? Proper signature?

Can clear if they have a continuous bond. Single entry MIGHTgo to local broker

Exam or OGA hold?

Prior notice if requiredAir: Wheels upOcean: 5 days prior to arrival

Need Commercial invoice, Packing List, BL’s or AWB’s, ISF form if ocean, OGA info, certificates if required

Verify all required info is on the commercial invoice, match pcs/wt. to packing list and transportation documents

Check for 1C in AMS. All docs to station for dispatch

Customs Brokerage Process


Power of attorneyWho can sign a power of attorney?

Corporations: An officer of the corporation (President, Vice President,

Corporate Secretary, Treasurer, CEO, COO, CFO, Chairman, General

Counsel). Other titles are acceptable if accompanied by Articles of

Incorporation, a resolution of the Board of Directors, or a letter from the

Corporate Secretary authorizing the named officer to sign.

Partnerships: Any partner.

Sole Proprietor: Owner, Sole Signing Officer

Individual: Self

LLC: Members, Directors, Officers unless a letter from the company is

provided authorizing another title to sign.

Foreign Company: Must complete the “Corporate Certification” establishing

the authority of the signatory to execute the Power of Attorney .


Customs Bonds

What is a customs bond?

A customs bond is essentially a contract between the importer and

CBP, under which CBP grants the importer the privilege to clear goods

through CBP and the importer agrees to meet certain conditions such

as producing required documentation and paying duties, taxes, and

fees where applicable, etc. The bond amount is based on risk

guidelines set by CBP.

When is it required?

A bond is required when importing goods into the US that are valued

over $2500.00 or if the commodity is subject to other government

agency requirements to secure potential duties, taxes, and fees owed

to CBP related to the imported goods per 19 CFR 113.40.


Customs Bonds

Types of Bonds:

Continuous:

• Valid for unlimited number of entries in a 12 month period

• Valid for entries cleared in any port in the USA

• A continuous bond is valid for the 12 month period. The minimum

amount is $50,000.00

Single Entry:

• Valid for one transaction only

• Some entries cannot be cleared remotely must be cleared by

broker in the port of entry.

• The single entry bond is drawn on the total value of the shipment

plus the duty and taxes unless there are other agencies involved.


Customs Bonds

Questions to help the importer determine what type of bond they

should get…

1. How often so you import? – What is the value ?

2. Do you import into multiple ports in the US?

3. Is your commodity subject to other government agency requirements? • The following are examples of categories where customs required the bond to be three times

the value: Food and Drug Administration

Environmental Protection Agency

Bureau of Alcohol Tobacco and Firearms

Consumer Products Safety Commission Toys and Fireworks

Agriculture Marketing Service

Federal Communication Commission

Toxic Substance Control Act

All merchandise subject to Quota or Visa

Shipments under Fish and Wildlife

4. Is the import shipping ocean? (Would need an ISF bond plus an entry bond

if not a continuous holder)


Compliance Concerns

Top 4 non-compliance issues

• Incorrect Harmonized Tariff code/classification

**Binding ruling services available

• Inaccurate or unclear commercial invoices

• Valuation

** Not correct according to Incoterms

** Non-dutiable charges not declared (Freight, Insurance, inland freight..)

** Make market value charges not declared (assists, packaging…)

• Recordkeeping


Invoices

Types of Invoices for Customs Purposes

• Commercial

A document prepared by the overseas shipper or seller that contains

pertinent information related to the transaction of sale between the buyer and

seller of imported merchandise.

• Proforma

A document prepared by the importer of record that contains pertinent

information related to the transaction of sale between the buyer and seller of

imported merchandise


Invoice Requirements

Requirements as per Customs Federal Regulations 141.86

• Port of entry to which the merchandise is destined.

• Name and address of importer of record.

• Name and address of the ultimate consignee if different than the importer.

• Name and address of manufacturer/shipper.

• Detailed description of the merchandise, including the name by which each item is known in the

country of sale.

• Unit price of the merchandise in the country of sale.

• Total value of the merchandise indicating the terms of sale associated with the actual purchase.

(CPT, EXW, FOB, DAP etc).

• Country of origin of the merchandise.

• Statement of use in the US

• Any rebates offered on imported merchandise between buyer and seller.

• Any discounts from price.

• Any values of assist, such as dies, molds, tools, and engineering work provided to the

manufacturer to assist in the production of the imported merchandise.

• Packing list (itemizing each net packed item).

• Must be in English

• Must be endorsed by the person or party who prepared the invoice.


Recordkeeping

Who must keep records?

Rules require owners, importers, consignees, importers of record,

declaration filers, entry filers, or other parties (or their agents) to

maintain records if they:

• Import merchandise into the Customs territory of the United States.

• File a drawback claim.

• Transport or store merchandise carried or held under bond

• Knowingly cause the import, transport, or storage of merchandise carried or held

under bond into or from the Customs territory of the United States.


Recordkeeping

What records must be kept?

• Businesses must keep records (referred to as the "(a)(1)(A) list") that they

have to prepare for the entry of merchandise.

***Complete (a)(1)(A) list is at www.ecfr.gov. Use the drop down to go to title

19 and then to “Appendix to Part 163”.

• Others required are those business, financial, and accounting records

ordinarily maintained for normal business transactions.

http://www.ecfr.gov/


How long must records be kept?

Unless otherwise stated, record keepers must keep them for…

• Five years from date of entry, or

• Five years from the date of the activity which required the maintenance of

the records (Ex. Warehouse entries_

Recordkeeping


Penalties?

• Failure to maintain or produce "(a)(1)(A) list" records:

Willful: not to exceed $100,000 per release or 75% of the appraised

value, whichever is lower.

Negligence: not to exceed $10,000 per release or 40% of the appraised

value, whichever is lower.

• In addition, if these records relate to goods eligible for reduced or free

duty rates, the merchandise shall be liquidated at the full column one rate

Recordkeeping


Acronyms commonly used in brokerage

ABI-automated broker interface

ACE- automated commercial environment

AMS-automated manifest system

AWB-Air Waybill

B/B- Breakbulk

BOL- Bill of lading

CAN-Customs assigned number

CBP-Customs and Border Protection

CEF-Customs exam facility

CES- Customs exam site

CTB- Continuous bond

C/O-Country of origin

D/O-Delivery order

ETA-Estimated time of arrival

ETD-Estimated time of departure

ETES-stimated time of sailing

FCC-Federal Communications

Commission

GRI-General rules of interpretation

HTS-Harmonized Tariff Schedule

ISF-Importer Security Filing

IOR- Importer of Record

LCL-Less than container load

MAWB-Master air waybill

NAFTA-North American Free Trade

Agreement

OBL-Original Bill of Lading

OGA- Other government agency

PAPS-Pre arrival processing system

PARS-Pre arrival release system

POA-Power of Attorney

SEB-Single entry bond

SPI-Special Program Indicator

TEU-twenty foot equivalent unit

TSCA-Toxic Substances Control Act

USDA-US Department of Agriculture


What are Incoterms?

• Incoterms are an internationally accepted

convention, protocol, framework

• When properly cited in a contract, the rules and

their provisions are accorded legal standing

internationally

• Define the terms of sale (i.e. what qualifies as

the ‘delivery’ of goods) and in doing so define

the obligations, risks, and costs of seller and

buyer in respect to ‘delivery’ of goods


What Incoterms Do


INCOTERMS 2020

INCO = International Commercial

Published by the International Chamber of

Commerce-2020

https://iccwbo.org/resources-for-

business/incoterms-rules/incoterms-

2020/

https://iccwbo.org/resources-for-business/incoterms-rules/incoterms-2020/


• They are not terms of payment

• They do not specify forms of payment

• They do not specify or grant credit terms

• Incoterms do not speak to transfer of ownership

or title to goods.

• They are not US or international LAW

What Incoterms Are Not


Classes of Rules for 2010

All Modes of Transportation

• EXW – Ex-works

• FCA – Free Carrier

• CPT – Carriage Paid To

• CIP – Carriage Insurance Paid To

• DAP – Delivered at Place

• DAT – Delivered at Terminal

• DDP – Delivered Duty Paid

Sea or Waterway ONLY

•CFR – Cost & Freight

•CIF – Cost, Insurance, & Freight

•FAS – Free Alongside Ship

•FOB – Free On-Board


Incoterms in Use

• Incoterms are always cited using their accepted three character

abbreviation

(i.e. EXW, CIF, DAT, etc.)• An Incoterms code is always followed by a ‘Named Place’.

Example – FCA Hong Kong Airport, DAP 2900 Walnut St or CPT

FRA, etc.

• You must have a place (or port/airport) at which the

transition between seller & buyer occurs


Rules for Any Mode of Transport


EXW Ex-Works…(named place)

• Seller fulfills all obligations when:

➢Goods are made available at the agreed place

& time

➢Not loaded upon a collecting conveyance

➢Not cleared for export

-Shipper is still responsible for export

compliance concerning licensing or AES

• Buyer bears all costs & risks in taking the

goods to the designated destination.

EXW – EX WORKS


FCA Free Carrier…(named place)

• Seller fulfills obligations when:➢ Goods are handed off to buyer’s designated carrier/ agent

at named place within the seller’s country

➢ Named place could be:

Seller’s premises

(FCA Seller Warehouse – Seller bears risk & cost of loading)

Any other place/ port/ terminal/ within origin country

(‘Place’ is often defined as the freight forwarder’s or Gov’t warehouse – seller may have to pay and

arrange local trucking)

• Buyer bears all costs and risk from time goods

are handed off to designated carrier/ agent

through to the desired destination.

FCA – FREE CARRIER


CPT Carriage Paid To…

(named place of destination)

Seller:➢ Arranges & pays for pre & main carriage to the agreed

place, including off-loading at carrier.

➢ Clears the goods for export (when required)

➢ Bares the risk of loss TO THE POINT OF FIRST

CARRIER ACCEPTANCE at origin.

Buyer:➢Arranges and pays for on-carriage at destination

➢Arranges & pays for import clearance, inspections etc

➢Bares the risk of loss DURING MAIN CARRIAGE

CPT – CARRIAGE PAID TO


CIP Carriage & Insurance Paid To… (named place of destination)

Seller:➢ Arranges & pays for pre & main carriage to the agreed

place including off-loading of the goods

➢ Clear the goods for export (when required)

➢ Bares the risk of loss TO THE POINT OF CARRIER

ACCEPTANCE at origin

➢ Arranges & pays for insurance for the Buyer benefit

(the 110% rule)


➢Arranges & pays for import clearance, inspections etc

➢Bares the risk of loss DURING MAIN CARRIAGE

CIP – CARRIAGE & INSURANCE PAID


DAT Delivered at Terminal…(named terminal of destination)

Seller:➢ Arranges & pays for all carriage to deliver the goods to

named terminal at, or within, destination country.

➢ Responsible for off-loading the goods at terminal


➢ Bares risk of loss to the point of delivery at terminal

(difference vs CIP/CPT)


➢Arranges & pays for import clearance

➢Arranges & pays for import formalities as necessary

(duty/ tax)

DAT - DELIVERED AT TERMINAL


DAP Delivered at Place…

(named place of destination)

Seller:➢ Arranges & pays for all carriage to deliver the goods to

named place at, or within, destination country.

➢ Is NOT responsible for off-loading of the goods at Buyer(Typically the buyer/ ultimate consignee’s premises)


➢ Bares risk of loss to the point of delivery at named place

Buyer:➢Arranges & pays for import clearance

➢Arranges & pays import formalities as necessary (duty/ tax)

➢ Pays for any customs inspections

➢ Storage charges – sticky – not clear

DAP- DELIVERED AT PLACE


DDP Delivered Duty Paid…(named place of destination)

Seller:➢Arranges & pays for all carriage to deliver the goods to

named place at, or within, destination country.

➢Is NOT responsible for off-loading of the goods at Buyer(Typically the buyer/ ultimate consignee’s premises)

➢Clear the goods for export (when required) & IMPORT

➢Pays all Duty, VAT, Storage, Inspections

➢Bares risk of loss to the point of delivery at named place

Buyer:➢Buyer has no responsibility for costs or liability

➢Not allowed in some countries; complicated in others

DDP – DELIVERED DUTY PAID


FOB Free On-Board…(named PORT of shipment)

Seller:➢Fulfills obligations when goods:

1. Are loaded onto the vessel (as selected by the buyer) at

the named port (could be inland CY)

2. Cleared for export (when necessary)

➢Bares risk until goods are loaded onto the vessel.

Buyer:➢ Arranges & pays for all carriage after the FOB point.

➢ Responsible for all costs of unloading at arrival terminal.

➢ Arranges & pays for import clearance

➢ Bares risk from time goods are placed onto vessel at origin

(named FOB point)

FOB – FREE ON-BOARD


CFR Cost and Freight…

(named port of destination)

Seller:➢ Arranges and pays for pre& main carriage to the agreed upon

destination port.

➢ Responsible for loading.

➢ Pays and arranges Export customs clearance (when necessary)

➢ Bares risk to the point at which goods are loaded at the origin

port

Buyer:➢Arranges & pays for on-carriage at destination

➢Responsible for cost of off-loading at destination port


➢Bares risk during main and on-carriage

CFR – COST & FREIGHT


CIF Cost, Insurance, & Freight…

(named port of destination)

Seller:➢ Arranges and pays for pre& main carriage to the agreed upon

destination port

➢ Responsible for loading

➢ Arranges and Pays Export customs clearance (when necessary)

➢ Arranges & pays for insurance ➢ Bares risk to the point at which goods are loaded at the origin port

Buyer:➢Arranges & pays for on-carriage at destination

➢Responsible for cost of off-loading at destination port


➢Bares risk during main and on-carriageCIF – COST, INSURANCE, & FREIGHT


Choosing an Incoterm

➢ Determine what your company’s desire/

tolerance is to assuming obligations, risk, &

related costs

➢ How accurately can you anticipate, or build-in,

costs?

➢ What is the benefit of controlling the movement

of merchandise vs. assumption of cost/ risk?

Customer Portal

▪ Web-based portal delivers timely tracking and document

information

▪ Booking

▪ Quote requests

▪ EDI Integration

▪ Inventory tracking

▪ PO management

▪ Block Chain-The Future of International Trade

▪ Customization and Reporting

▪ Customizable shipment information displays

▪ Exportable data

▪ Email alerts

▪ Status triggers

▪ Critical shipment movements

Technology-Closing the Loop

Technology-Examples

Improving the Customer

Experience with Technology

• Near real-time capture and delivery of

status updates

• Digital capture of Proof-of-Delivery and

related documents

• Capture photos and notes on delivery

exceptions

• Barcode scanning available to reduce

exceptions (Future version)

• Surveys for immediate customer feedback

on service quality

• Simple interface supports process and

continuous improvement

Q&A